European investment volumes up 14% in Q2: DTZ

Investment in commercial real estate across Europe in the second quarter of 2011 reached EUR 25.4 bn, a 14% increase from EUR 22.4 bn in Q1, according to DTZ Research in its latest ‘Investment Market Update’ report. Investment volumes averaged EUR 27.1bn over the past four quarters compared with EUR 20.7bn in the same period a year ago. This is the seventh consecutive quarter of growth in this measure.

Magali Marton, head of DTZ CEMEA Research, said: 'Within the major European markets, the UK, France and Germany posted positive growth of 14%, led by an increase of 33% quarter on quarter in France to EUR 2.7bn.However activity in all three markets remains below the five-year average. In contrast to a peak in activity in Q1, investment within CEE markets has slowed with EUR 400 mln invested in Q2 compared to EUR 1.3 bn in Q1. The Nordics continue to post significant increases in market activity, with a 79% rise q-o-q to EUR 4.6 bn'.

The report reveals that the share of activity from overseas investors (29%) fell to its lowest level since 2002, reaching EUR 7.5 bn in Q2 2011. Both inter and intra regional investors were less active during this quarter with investors outside of Europe least active. In contrast, domestic investment increased 28% in Q2 to EUR 17.9 bn. Activity by global investors nearly doubled this quarter to EUR 1.4 bn from EUR 800 mln in Q1. This is in line with recent DTZ research revealing a substantial amount of capital flowing from investors with global mandates.

The office sector accounted for the largest proportion of Q2 activity with EUR 9.8bn invested, representing 39% of total volumes. Activity also remained buoyant in the retail sector with volumes totalling EUR 9bn, driven in particular by shopping centres. The industrial sector saw a significant decrease in investments over the quarter, falling 45% to EUR 1.7bn and equating to a market share of just 7%. Activity in ‘other’ sectors increased from EUR 0.6bn in Q1 to EUR 2.7bn in Q2, this jump was partly attributable to sales of healthcare premises and several road side assets.